Piyush Goyal has a point, but he missed many

Oh, boy, did Piyush Goyal send a rocket up the backside of India’s startup ecosystem last week or what? His jibe at the Indian startup scene set off a firestorm of reactions.

The Commerce Minister’s complaint was that Indian startups are focusing too much on areas like food delivery, quick delivery services and fancy ice creams while China advances in microchips, EVs, and robotics. This struck a nerve – both with those who cheered his straight talk and those who felt unfairly targeted.

Amid all the noise, thoughtful suggestions from his 35-minute speech barely got noticed, like calling for a local investment fund, creating tinker hubs at all schools and exhorting the organisers of the Mahakumbh to scale up the event to be a global one.

But ice cream makes tastier headlines – and that’s what landed on everyone’s plate and there were a lot of pushbacks. Industry stalwarts like Zoho founder Sridhar Vembu and Zepto CEO Aadit Palicha rallied strongly against Goyal’s comment, pointing out the value created by popular Indian apps, the employment it has generated and faulty policies.

There was a lot of support for Goyal too. Ola founder Bhavish Aggarwal and boAt co-founder Aman Gupta were among them. “Our startup community needs to introspect as to why we’re just building consumer tech companies,” said Aggarwal.

All this heat and noise aside, let’s get this straight: India’s startup story is still a remarkable one, warts and all. It has produced unicorns, given employment to millions, led to the creation of a digital public infrastructure that the world admires, and above all nurtured a generation that wants to build. Still, as time goes on, a few chinks are beginning to appear in the armour.

When a budding entrepreneur looks for role models in India, who do they see? Infosys, Wipro, TCS – service giants that built empires on providing backend support to global corporations. Other big successes are food delivery platforms like Swiggy and Zomato and e-commerce sites Myntra, Flipkart and the lot. These success stories have shaped our collective imagination about what’s possible.

Unhealthy Trends

Moreover the startup ecosystem has developed an unhealthy obsession with funding rounds. Somewhere along the way, valuation became a proxy for value. A startup gets noticed not for what it built, but for how many crores it raised and media coverage reinforces this distortion. You will see many stories like “XYZ raises millions” but you have to dive deeper to see one about their products and what they actually deliver.

Now, when young founders look for inspiration, they see scalable service, not original invention. As for hardware startups, they are practically an endangered species.

The environment for even established manufacturers isn’t looking too rosy. A recent Reuters report revealed that India’s Production-Linked Incentive (PLI) programmetagged at 23 billion US dollars –meant to boost domestic manufacturing and attract global companies–has seen patchyresults and will be discontinued.

Except for pharmaceutical and mobile phone production, sectors like steel, textiles, and solar panel manufacturing have failed to deliver. These are areas where India faces fierce competition from China. So maybe, just maybe, cut our fledgling startups some slack.

Bitter Pills

It is unfair to leave the entire blame on the manufacturers. Take the medical device sector, one area that was earmarked for support by the Ministry of Commerce and Industry’s PLI scheme. A report by the joint parliamentary panel submitted in March 2025 was scathing in its assessment of the role of Central Drugs Standard Control Organisation, which comes under the Ministry of Health & Family Welfare.

It said the department was slow, opaque, and followed highly discretionary licensing process, and warned that it is driving manufacturers out of India to countries like Vietnam and Malaysia and discouraging startups from entering the sector. A classic example of one department proposing and another one disposing. Lack of coordination between government departments whose area of operation often overlap is a nightmare for many manufacturers.

Another innovation killer is the lack of clarity on government rules. Take fintech, for example. It was once the darling of India’s startup scene, given a vast unbanked population and outdated banking systems. The opportunity was immense. And to some extent, the UPI revolution did take us forward.

But talk to fintech founders today, and you’ll hear a litany of complaints: sudden rule changes, unclear RBI mandates, and a lack of policy predictability. How do you build a long-term product when the regulatory rug might be pulled out next Tuesday?

Lack of Research

And here’s the elephant in the room that even Goyal didn't address: India’s abysmal research spending.

This isn’t outsider criticism – the government’s own Economic Survey of 2023-24 pointed it out India’s R&D investment as a percentage of GDP [gross domestic product] stands at 0.64 per cent, compared to China (2.41 per cent), the US (3.47 per cent), and Israel (5.71 per cent).

The private sector’s contribution to R&D remains low at 36.4 per cent of the country’s GERD [Gross Expenditure on R&D] compared to China (77 per cent), and the US (75 per cent).

Our universities churn out research papers that never see the light of commercial application. Even when researchers approach funds designed to support innovation, they face bewildering responses: “This technology already exists elsewhere, so why research it?” The bureaucrats evaluating cutting-edge proposals frequently lack the technical knowledge to judge them properly.

Some entities set up to boost startup ecosystem do not fair better either. Founders say they often adopt an attitude of a police interrogation centre, where the bureaucrats are keener on reminding about compliances than hand holding the entrepreneurs.

Flying Blind

Underlying all these challenges is a fundamental problem: our innovation ecosystem runs on incomplete, unorganised data and scattered information about available resources. Without reliable information, entrepreneurs are often forced to make decisions based on hunches rather than verifiable evidence.

Ironically, Goyal himself demonstrated this problem. Rather than drawing on the Reuters report on PLI issues or the parliamentary committee findings on medical device manufacturing barriers, he based his startup criticism on a social media post comparing India and China – an apples-to-oranges comparison that oversimplified complex realities.

Goyal was right to sound the alarm, but if India truly wants to leap ahead – into deep tech, space tech, climate tech, or even good old-fashioned hardware – we need more than jibes and motivational speeches.

AI’s great leap in China

Last week, authorities in the Chinese capital announced that Beijing schools will introduce AI as a subject for primary and secondary school students starting 1 September 2025. Now, the rush to adopt AI is spreading to rural areas, reports the South China Morning Post. It says provincial authorities are asking villagers to seek the advice of AI chatbots like DeepSeek to find solutions for their problems, be it in agriculture or pig farming. The report says banners and wall writings of such advice are appearing in villages. Major tech firms like Alibaba Group Holding and Tencent Holdings have, in turn, developed easy-to-use chatbots to accelerate the proliferation of AI applications.

But AI is not solving everyone's problems. In the US, high school teen Zach Yadegari says many universities have rejected him though he had co-founded a popular AI tool that has been downloaded a million times. Yadegari founded the AI calorie-tracking app Cal AI and he says it is generating million-dollar revenue, according to TechCrunch. But despite his real-world success, universities remain unimpressed, and top institutions including MIT, Harvard and Stanford have rejected his application. The teen thinks the problem was his essay – and tens of thousands of commenters on X agree. They say it was too arrogant.

Indian gamers in for a Blast

Indian gamers could see a world-class event coming to the country, now that Reliance-owned Rise Worldwide has entered into a tie-up with Denmark-headquartered Blast, a globally known tournament organiser. The new entity will develop, host, and promote esports competitions across India, leveraging Blast’s production capabilities and Reliance's digital infrastructure, reports Indian Startup News. Blast, which works with major gaming companies like Epic Games, Valve, Riot Games, Krafton, and Ubisoft, will be relishing its entry into the Indian market, which now accounts for 18 percent of global gamers, with 600 million playing regularly.

Cyborg joins Myanmar mission

Remember how Singapore researchers were experimenting with turning cockroaches into cyborgs by attaching microchips to their backs? Well, they are now out of the lab and working on the ground in Myanmar to locate earthquake survivors. A total of 10 cyborg cockroaches have been sent to Myanmar to assist with search-and-rescue efforts after a 7.7-magnitude earthquake struck on 28 March, killing more than 3,000 people, reports The Straits Times. They are part of the Singapore Civil Defence Force’s (SCDF) Operation Lionheart contingent, which has been deployed to Myanmar to support the rescue mission. This is the first time in the world such cyborgs have been used in a humanitarian operation.

A monster discovery

You never know what technology throws up. A robotic submarine being tested on Scotland’s Loch Ness has discovered a camera that was sent down 50 years ago to snap pictures of the mythical monster said to inhabit the lake. The ocean-going yellow sub – called Boaty McBoatface– was undergoing trials when its propeller snagged the mooring of the 1970s camera system, reports BBC. Operators of Boaty McBoatface managed to recover the camera and even print a few images from it.Unfortunately for the Loch Ness Monster fan club, their hero still refuses to take selfies.